Pro-Gaddafi forces were advancing on the town, some 470 miles east of the capital Tripoli.

Forces loyal to Gaddafi also retook control of an oil installation in the eastern town of Brega, south west of Ajdabiya, according to Ahmed Jerksi, manager of the Sirte oil company which runs the facility.

Two US warships have entered the Suez Canal on their way to the Mediterranean, moving closer to the Libyan coast after orders from US Defence Secretary Robert Gates.

Mr Gates said yesterday that he had ordered two ships into the Mediterranean and he is sending 400 marines to the vessels to replace troops that left recently for Afghanistan.

The Obama administration is conscious that it may need to flex US muscle to help usher Gaddafi out of power but is fearful of provoking even deadlier violence from a regime that has shown little restraint in attacking its own people.

The US military also has no interest in getting bogged down in a third war.

Mr Gates said yesterday that any military action in the North African country must be carefully considered because it would have broad consequences for the region and the US military, affecting even the effort in Afghanistan.

And military leaders said it would be difficult to organise even the relatively modest threat of a no-fly zone over Libya to prevent Gaddafi launching aerial assaults on his opponents.

Mr Gates's caution contrasted with the more strident tone adopted by US secretary of state Hillary Clinton, who warned that Libya "could become a peaceful democracy or it could face protracted civil war".

Mrs Clinton told Congress the US must lead an international response to the crisis, including expanding already tough financial and travel sanctions against Gaddafi, his family and confidants, and possibly imposing a no-fly zone.

"The United States continues to look at every single lever it can use against the Gaddafi regime," she said.

Mr Gates noted that the UN Security Council sanctions resolution passed last week provided no authorisation to use armed force in Libya, nor is there agreement among Nato allies on taking military action.

Mrs Clinton also recognised the risks in outside military intervention, saying it might compromise Gaddafi's opponents, who do not want to be seen as American agents.

"They want this to have been their accomplishment," Mrs Clinton told the committee. "We respect that."

On the no-fly zone, Marine General James Mattis, head of US central command, said the military would have to take out Libyan air defences to implement such an order.